Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nepa AB (OSTO:NEPA, Financial) has seen an improvement in underlying profitability, with a significant increase in adjusted EBIT.
- The company has implemented cost control measures, resulting in a 26% decline in personnel costs.
- Nepa AB (OSTO:NEPA) has a strong focus on profitable growth, with a new sales organization and clear performance indicators.
- The company has a diversified presence in 60 markets, allowing it to conduct research and provide insights globally.
- Nepa AB (OSTO:NEPA) has recruited experienced personnel in sales and marketing, which is expected to drive future growth.
Negative Points
- The market remains slow, with a 'wait and see' attitude from clients due to economic uncertainties.
- There has been a decline in Annual Recurring Revenue (ARR), driven by a few client losses.
- Net sales growth has decreased, although profitability has improved.
- The company has experienced churn among subscribing clients, impacting revenue stability.
- Nepa AB (OSTO:NEPA) faces challenges in maintaining data quality, which is a common issue in the industry.
Q & A Highlights
Q: Considering your intention to ramp up sales and marketing efforts, how should we view the 8% EBITDA margin? Is it a floor you're looking to build on?
A: Anders Dahl, CEO: Our ambition is to maintain and improve this level. We have built a framework on allowables, KPIs, and performance indicators to ensure that our market investments and sales efforts are aligned with maintaining or improving profitability.
Q: Could you elaborate on the significant improvement in your gross margin, which stood at 77% despite a negative product mix?
A: Anders Dahl, CEO: We have improved data quality by collaborating with partners and using AI to detect deviations. This has helped us reduce turnaround time and ensure we base our conclusions on the best possible data.
Q: What caused the 38% drop in ad hoc sales from subscription customers year-on-year?
A: Anders Dahl, CEO: This is more of a temporary issue due to timing and market softness. Some activities have been pushed out in time, but we expect them to occur later.
Q: Can you provide an update on your organizational changes and the impact of the new Chief Revenue Officer?
A: Anders Dahl, CEO: We have shifted to a more functional organization, allowing us to serve clients across different offices. The new Chief Revenue Officer is building a strong new business team and focusing on cross-selling and upselling to existing clients.
Q: Could you explain your decision to stop capitalizing R&D on the balance sheet?
A: Anders Dahl, CEO: We have shorter lead times and are more product-driven, developing based on client needs. This approach allows us to take costs directly into the P&L, providing a clearer view of profitability.
Q: How do you plan to leverage the potential market opportunity with competitors like YouGov pulling back from smaller markets?
A: Anders Dahl, CEO: We haven't noticed a significant impact yet, but we are positioned to be flexible and creative, offering tailored solutions that larger competitors may not provide. We aim to increase our presence in the Nordics and explore other markets.
Q: What is the status of your M&A plans?
A: Anders Dahl, CEO: We are still in the early stages of evaluating potential acquisitions. We are mapping opportunities that align with our technology platform, client base, and geographical markets.
Q: Is the launch of the new subscription product for Marketing Mix Modeling (MMM) still on track for Q4?
A: Anders Dahl, CEO: Yes, the launch is planned for Q4, and we have committed clients. The product is gaining interest, and we have already delivered versions of it.
Q: What is your approach to maintaining client relationships and addressing churn?
A: Anders Dahl, CEO: We proactively engage with clients, offering ad hoc solutions and aiming to re-establish recurring revenue relationships. We focus on maintaining high client satisfaction and adapting to changes in client needs.
Q: How do you plan to achieve profitable growth while managing costs?
A: Anders Dahl, CEO: We focus on building a strong sales and marketing organization with clear KPIs, leveraging data-driven strategies, and maintaining cost control. Our goal is to drive growth while ensuring profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
